11 July 1995 External T.I. 9517935 - NON-ELIGIBLE RETIREMENT ALLOWANCE

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether an amount in respect of the non-eligible retiring allowance may be transferred to a spousal RRSP?

Position TAKEN:

May be transferred to the his/her RRSP or spousal RRSP within the limits set out in 146(5) and 146(5.1) respectively.

Reasons FOR POSITION TAKEN:

Routine

National Defence
DCP (Administration)
7th floor, North Tower						5-951793
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Ottawa, Ontario
K1A 0K2

Attention: Linda Roos

July 11, 1995

Dear Sirs:

Re: Retirement Allowance - Transfer to Registered Retirement Savings Plan ("RRSP") and Contribution to RRSP

This is in response to your letter of July 7, 1995 asking whether an amount in respect of the portion of a retiring allowance not transferable to an RRSP (non-eligible retiring allowance) may be transferred to a spousal RRSP in a particular case.

Paragraph 60(j.1) of the Income Tax Act (the "Act") provides a deduction for the transfer of a retiring allowance to an individual's RRSP. The deduction is permitted up to a maximum amount described in subparagraph 60(j.1)(ii) of the Act, namely $2000 times the number of years the individual was employed by the employer or a person related to the employer plus $1500 times the number of years before 1989 in respect of which employer contributions under a pension plan or deferred profit sharing plan of the employer or a person related to the employer had not vested in the individual at the time the retiring allowance was paid.

The amount of the non-eligible retiring allowance that cannot be transferred to an RRSP in accordance with 60(j.1) may be contributed to an RRSP and to a spouse's RRSP within the limits set out in subsections 146(5) and 146(5.1) of the Act, respectively. Pursuant to these subsections, a taxpayer may deduct in a particular taxation year the lesser of:

1. any premiums paid into the RRSP under which the taxpayer or his spouse is the annuitant, in the taxation year or the first 60 days of the subsequent taxation year, provided these premiums have not previously been deducted, and

2. the taxpayer's RRSP deduction limit for the year.

Beginning with the 1991 taxation year, the RRSP deduction limit is provided by our Department on the Notice of Assessment for the previous year or by the Ottawa District Office.

Income from any source may be used to make a contribution to an RRSP. In other words, in any given year an amount up to the RRSP deduction limit for the year may be deducted regardless of the source of income used to make contributions to the RRSP. For example, the non-eligible retiring allowance may be used.

For further information, please refer the enclosed "1994 RRSP and Other Registered Plans for Retirement" guide and Interpretation Bulletins IT-124R6 and IT-307R3 on the topic of contributions to RRSPs and spousal RRSPs.

As explained in paragraph 21 of Information Circular 70-6R2 dated September 28, 1990, the above comments do not constitute an advance income tax ruling and are not binding on the Department. We trust the above comments will be of assistance to you. If you have any questions do not hesitate to contact us.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch